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RMI 270 Ch. 24

by: Danielle Notetaker

RMI 270 Ch. 24 RMI 270

Danielle Notetaker
GPA 3.8

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Notes for Exam #3
Dr. Fitzgerald
Class Notes
Risk Management, Insurance
25 ?




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This 4 page Class Notes was uploaded by Danielle Notetaker on Thursday April 7, 2016. The Class Notes belongs to RMI 270 at Ball State University taught by Dr. Fitzgerald in Spring 2016. Since its upload, it has received 53 views. For similar materials see in Risk Management And Insurance at Ball State University.

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Date Created: 04/07/16
RMI  270  Exam  #3  Study  Guide  Ch.22,  23,  24,  20     Chapter  24     Dwelling  Program   • Most  homeowners  are  insured  under  a  homeowner’s  policy,  but  some  are  not   For  example:   o If  the  home  is  not  occupied  by  the  owner  but  is  rented  to  the  tenant   o The  property  owner  is  ineligible  for  a  homeowners  policy   o Homeowners  want  a  less  costly  policy   • Major  differences  between  dwelling  coverage  &  homeowners:   o Dwelling  forms  do  NOT  include  coverage  for  theft  of  personal   liability!!!   § Can  add  coverage  through  endorsements   • Current  dwelling  program  includes:   o Basic  form  –  least  coverage   o Broad  form   o Special  form  –  broadest  coverage   *The  ISO  dwelling  program  is  designed  for  dwellings  that  are  ineligible  for  coverage   under  a  homeowners  policy  and  for  people  who  do  not  want  or  need  a  homeowners   policy     Mobile  Home  Insurance   • Mobile  home  insurance  is  written  by  adding  an  endorsement  to  either  a  HO-­‐2   or  HO-­‐3  policy,  which  tailors  the  homeowners  policy  to  meet  the  special   characteristics  of  mobile  homes   • Mobile  home  must  be  designed  for  year-­‐round  living  (no  campers)   • Coverage  A  insures  the  mobile  home  against  physical  damage  losses  on   replacement  cost  basis       Inland  Marine  Floater   • Provides  broad  coverage  on  property  frequently  moved  from  one  location  to   another     o Ex:  jewelry,  furs,  cameras   o Insurance  is  tailored  to  specific  type  of  personal  property  to  be   insured   o Desired  amount  &  types  of  insurance  can  be  selected   o Broader  coverage  can  be  obtained   o Most  floaters  cover  insured  property  anywhere  in  the  world   o Often  written  without  a  deductible     Personal  Article  Floater  (PAF)   • Insures  personal  property  on  an  “all-­‐risk”  or  “open-­‐peril”  basis   • Direct  physical  losses  are  covered  except  for  losses  specifically  excluded       Watercraft  Insurance   • Homeowners  policy  provides  only  limited  coverage  on  boats   • Homeowners  covers:     o Coverage  on  boat  is  limited  to  $1500   o Direct  loss  from  windstorm  or  hail  is  ONLY  covered  if  the  boat  is   inside  fully  enclosed  building   o Theft  of  boat  is  excluded   o Legal  liability  not  covered   • Boat  owners  Package  Policy:  combines  physical  damage  insurance,  medical   expense  insurance,  liability  insurance  into  one  policy   o Direct  physical  losses  are  covered   • Yacht  Insurance:  designed  for  larger  and  more  valuable  boats     Government  Property  Insurance  Programs   1. National  Flood  Insurance  program   2. FAIR  Plans:  provide  basic  property  insurance  to  individuals  who  are  unable   to  obtain  coverage  in  the  normal  markets   • Definition  of  flood  =  a  general  and  temporary  condition  of  partial  or   complete  inundation  of  two  or  more  acres  of  normally  dry  land  or  two  or   more  properties  from  overflow  of  inland  or  tidal  waters   • The  dwelling  form   • The  general  property  policy     • The  residential  condominium     Title  Insurance   • Protects  the  owner  of  the  property  or  the  lender    against  any  unknown   defects  in  the  title       Personal  Umbrella  Policy   • Designed  to  provide  protection  against  a  catastrophic  lawsuit  or  judgment   Features:   o Provides  excess  liability  insurance   o Coverage  is  broad  &  protects  against  things  not  normally  covered   o This  policy  is  a  reasonable  cost     Chapter  20  Homeowner’s  Insurance     o HO-­‐1:  basic   o HO-­‐2:  broad  form,  named-­‐peril  policy     o HO-­‐3:  special,  losses  to  the  dwelling  (how  are  they  settled,   replacement  cost  or  actual  cash  value?)  and  losses  to  personal   property  (how  are  they  covered?)   o HO-­‐4:  tenants  form  (renters  insurance)   o HO-­‐5:  comprehensive  form   o HO-­‐6:  condos,  unit-­‐owners  form   o HO-­‐7:  mobile  homes   o HO-­‐8:  modified  coverage  form,  older  homes,  Ex:  if  you  have  a   really  old  home,  it  may  costs  a  lot  to  replace  it  exactly  the  same     • HO-­‐3:  insures  the  dwelling  and  other  structures  against  direct  physical   loss  to  property  (all  direct  losses  to  property  are  covered)   • Losses  paid  on  full  replacement  cost  with  no  deduction  for  depreciation     • HO-­‐4:  covers  the  tenant’s  personal  property  against  loss  or  damage  and   also  provides  personal  liability  insurance.  Also  pays  for  additional  living   expenses  if  your  home  is  completely  burned  down     • HO-­‐8:  modified  coverage  form  that  covers  loss  to  the  dwelling  and  other   structures  on  the  basis  of  repair  cost  (for  older  homes)     • Designed  for  older  homes  whose  replacement  costs  exceeds  its  market   value     Appendix  A-­‐  Homeowners  3-­‐  Special  Form   Definitions:   • “you”,  “your”  refer  to  the  named  insured   • “we”,  “us”  “our”  refer  to  the  company  providing  the  insurance   • “bodily  injury”  means  bodily  harm,  sickness,  disease,  including  required  care,   loss  of  services  and  death  that  results   Section  1  –  Property  Coverages   A. We  cover:   a. The  dwelling  on  the  residence  premises   b. Materials  &  supplies  located  on  or  next  to  residence  premises   c. Do  not  cover  land   B. Other  Structures   a. Cover  other  structures  that  are  connected  to  the  dwelling  by  only   fence,  utility  line,  or  similar  connection   C. Personal  Property:  cover  personal  property  owned  or  used  by  an  “insured”   while  its  anywhere  in  the  world   a. Covered:   • Windstorm  or  hail:  this  peril  includes  loss  to  watercraft   ONLY  while  in  a  fully  enclosed  building.  Does  NOT  include   damage  caused  by  rain,  snow,  sleet,  sand,  or  dust  UNLESS   wind/hail  creates  a  hole  in  ceiling  and  then  snow  damages   the  boat   • Attempted  theft   • Accidental  overflow  of  water  or  steam:  does  not  include   coverage  for  the  system/appliance  that  is  damaged  &   leaking.  It  only  covers  other  property  that  has  water   damage   b. Property  NOT  covered:   • Animals   • Motor  vehicles   • Aircraft   • Hovercraft   • Property  of  tenants   • Credit  cards   • Water  or  steam   D. Loss  of  Use/  Loss  Settlement   a. Additional  Living  Expense   i. If  there  is  a  covered  loss  to  your  home,  where  you  can  no   longer  live  in  that  home,  we  will  cover  living  expenses  incurred   for  you  to  live  a  normal  standard  of  living   b. Fair  Rental  Value   i. If  there  is  a  covered  loss  to  a  home  rented  to  others  or  held  for   rental,  we  cover  fair  rental  value  (rent  due  from  tenant)  while   it  is  not  fit  for  renters  to  live  in   c. Loss  or  Expense  NOT  covered   i. WE  do  not  cover  loss  or  expense  due  to  cancellation  of  a  lease   or  agreement   d. The  terms  “cost  to  repair  or  replace”  and  “replacement  cost”  do  NOT   include  the  increased  costs  incurred  to  comply  with  laws    


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